Some impressive events have happened in the housing market over the last seven or eight years. Many homeowners have seen their property dramatically increase in value.
But for some of us who remain on the outside looking in, affordability has become a tough issue. If you’re trying to buy a house in 2019, you can’t expect your dream property land in your lap.
Data curated by Curbed.com shows just how serious the U.S. affordable housing crisis has grown in certain markets. Nearly two-thirds of renters nationwide say they can’t afford to purchase a home.
To compound the problem, note that home prices are increasing at twice the rate of wage growth. Even with historically low interest rates, housing price inflation has prevented millions from purchasing to own.
Although the housing crisis is a serious issue, it’s not the end of the world. You won’t be able to buy a single-family home in Manhattan if you earn $45,000 a year, but there are plenty of other markets where you can. Cheaper housing does exist; you just have to know where to look for it.
If you want to buy an inexpensive home, you’ll need to exercise creativity, patience, and a willingness to go about it a little differently. Here are seven key suggestions.
Don’t be afraid to put your name out there. Just like jobs and hobbies, networking is one of the keys to finding a good housing deal.
Let your friends, family, and coworkers know you’re searching for a home. They might not be selling a home themselves anytime soon, but they may interact with people who will.
Finding a house before it hits the market is worthwhile for a number of reasons. First, people may be willing to sell for less than the place is worth if they can avoid the expense of listing the property.
Second, you might be able to strike a deal without involving agents. This saves the seller six percent … and some of that may be passed along to you at purchase.
MLS data can help you find cheap homes. Not only can you filter based on price, but you can also keep an eye out for residences that are above your price range, but that have been listed for a long while.
If you’re looking for a $125,000 house and you find a property that you like for $150,000, you might assume it’s out of your reach. But if you notice the property has been listed for six months without an accepted offer, you can safely guess that the seller’s expectations have diminished.
The owner may even have grown anxious to get rid of the house. Make an offer at a price you’re comfortable with — and promise a quick closing. You never can be sure what might happen.
Foreclosures can be good deals. The key word here is can. The ones listed on the MLS aren’t generally great deals.
The price might be lower than when it sold the last time, but you have to think about all the expense to fix it up. By the time you pay for the repairs, you’ll discover the bank had it priced fairly competitively for comps in the neighborhood.
“Every so often, if you’re very lucky and very fast to write an offer, you might be able to buy a foreclosure for a little bit under the comparable sales,” real estate expert Elizabeth Weintraub writes. “But bargain-basement deals are typically not listed in the MLS. Well, they are, but they aren’t foreclosures.”
If you want a cheap foreclosure, you should shop at a trustee’s or sheriff’s auction. You’ll probably have to pay cash, though.
You can also try private online auctions, which might let you obtain financing to buy the property. A third option (and perhaps the best one) is to contact banks directly. You’ll get turned down more times than not, but it only takes one “yes” to secure a good deal.
Drive around neighborhoods or areas that you like and look for houses that show signs of distress or neglect. Details like unkempt landscaping, boarded-up doors and windows, deterioration, and piled newspapers may all be indications the homeowner is unable to keep up.
Make a note of any houses you find, then search public records to find out who the owners are. You can mail them a letter to ask if they’re willing to sell their home.
If you mail out 25 of these letters, you might only hear back from one or two homeowners. But it only takes one deal to land your next house!
If you want a cheap house, you must be willing to get your hands dirty. You aren’t going to find a turnkey property that’s ready to live in.
In all likelihood, you’ll have to do some significant repairs and cosmetic updates. But the more you’re willing to do, the greater the range of options you’re likely to be able to choose from.
For the most part, the properties in the middle of a city are the most expensive. Those on the outskirts of town are less expensive. Properties in certain suburbs are even more affordable.
The ones in rural areas are often the cheapest. If you can’t find something that’s affordable in town, move farther out until the inventory matches your budget.
You’ve probably heard people say that renting is like throwing money down the drain … but it isn’t always true. When you rent, you don’t have to pay property taxes, mortgage interest, or property insurance.
You also don’t have to fork over thousands of dollars when the AC unit needs to be replaced or a burst pipe leads to serious damage. Renting for another year could allow you to save more money, which increases your spending power and creates more buying options.
The Houston real estate market is as healthy as it’s ever been, but there are still plenty of affordable housing options for those who want to buy a home without mortgaging away the future. If you’re interested in learning more, Green Residential can walk you through the process.
Contact us today to learn more about our home buying and selling services!
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